Conceptual framework comprises the theoretical structures, including various assumptions, principles or rules, companies follow when conducting operations. This framework may be unique to the company’s mission, vision, and ownership. While smaller businesses may not use conceptual framework in their organizational structure or management practices, larger companies or corporations often use this framework to bolster the strength of its operating environment. A common use of conceptual framework is in the corporation’s corporate governance.

Corporate governance contains specific rules and practices companies follow to ensure the accountability and fairness in transparency in relationships with business stakeholders. Business stakeholders include individual investors, customers, managers, employees, government agencies, and the general public. The conceptual framework of corporate governance often covers the contractual agreements, conflict of interest reconciliation procedures, and guidelines for governing internal employees.

Conceptual framework is used to guide the contractual agreements made between a company and business stakeholders. These guidelines ensure that the company does not enter into business contracts or formal written agreements that overextend the economic resources of the company. The framework may also list the minimum acceptable percentage regarding the rate of return for business investments and other professional relationships or partnerships. The responsibilities, rights, and expectations of each entity listed a contractual agreements may also be determined using conceptual framework.

Companies often develop specific framework procedures for conflict resolution to ensure that internal or external business situations do not get out of hand. While conflict resolution is an important business function relating to external business stakeholders, large companies may also face numerous conflicts between various departments inside the business. Conceptual framework may outline the specific role of each individual, department, or other entity in the business and how conflicts will be reconciled according to company procedure. Companies may use outside legal counsel or an arbitration process when dealing with conflicts relating to external business stakeholders.

Corporate governance usually includes a system of checks and balances. This check and balance system helps executive managers or directors limit the amount of power one individual or group has when making business decisions. Allowing a single individual too much decision-making power can allow an individual to make decisions regarding his personal interests, rather than the company’s interests. Internal business departments may also act the same way if too many decision makers are grouped in one department. While this situation may not be extremely unprofitable or dangerous, it can force the company down a myopic path and subvert the importance of the company’s conceptual framework.

Discuss this Article

CharredPost 4

@David09 - I totally agree. I’ve been in brainstorming sessions with companies that are trying to put vision and mission statements down on paper. They move on from there to come up with ideas for their policies and procedures.

Basically what they’re doing is coming up with a qualitative conceptual framework for their businesses.

One of the hallmarks of this kind of collaborative brainstorming session is the use of one word phrases that encapsulate a company’s values. People may throw out words like “caring,” “honesty,” “quality,” etc., as they try to come up with the framework.

It’s kind of like free writing out loud. I think it’s a good practice, because like free writing it brings out your deepest convictions which you can use to build your framework.

David09Post 3

@MrMoody - That’s a good example. If you want to know the conceptual framework for your company’s general practices regarding its employees, just pick up the employee handbook. Read the whole thing.

You’ll know what the company’s general philosophy is about how it views its employees and their conduct in the workplace. Sometimes people decry things like a conceptual framework, precisely because they claim that its abstract.

But if you don’t spend some time thinking about what you really believe and get some general principles down first, then it will be harder to iron out the concrete details of policies and procedures.

Your employee handbook – and other corporate policies – will end up being nothing more than rehashing of things you’ve read from other handbooks or pieced together from memory.

MrMoodyPost 2

@hamje32 - Yeah, you will find conceptual framework examples in a variety of disciplines. Since it is somewhat abstract, as you pointed out, you will often find references to this body of theories and assumptions in academic research projects.

If you read a journal article that describes a certain study on a group of patients, the article will usually begin by outlining the basic concepts and theories and hypotheses that guided the author’s approach.

To stick with the article’s focus on employment, however, I’ll pick one concrete example: hiring and promotional practices. You will sometimes hear some companies say that they promote from within.

This is a practice that represents a part of their conceptual framework for employee promotion and retention; they may realize that employees who rise from within the ranks of the company are more contented, and more likely to stay with the firm.

hamje32Post 1

I actually think that a conceptual framework is more of an abstract concept, and not strictly limited to its usage within corporate governance, although it could certainly include that.

You can, for example, talk about the theoretical framework behind a new approach to software design (the field that I am in). In that case you are talking about a new way of building software; perhaps you decide to use object oriented approaches rather than traditional procedural approaches for instance.

In that context, the object oriented approach would be your overall development framework. That means that you would structure your code using objects and classes, which are part of the blueprint of this framework.

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